USD/JPY climbs to daily highs near 106.50 after US NFP report

• USD/JPY is rising toward 106.50 in the early American session.
• US Dollar Index climbed above 93.00 after US jobs report.
• Unemployment Rate in US dropped to 8.4% in August. 

The USD/JPY pair gained traction in the early American session on Friday and climbed to a fresh daily high of 106.47. As of writing, the pair was up 0.25% on the day at 106.44.

US NFP report lifts mood and USD

The upbeat August jobs report from the US on Friday provided a boost to the greenback. The US Bureau of Labor Statistics announced that Nonfarm Payrolls in August increased by 1.37 million and the Unemployment Rate declined from 10.2% to 8.4% despite a 0.3% increase in the Labor Force Participation Rate.

With the initial reaction, the US Dollar Index (DXY) turned north and broke above 93.00. As of writing, the DXY was up 0.3% on the day at 93.07.

Meanwhile, the S&P 500 futures turned positive on the day after the data and revealed a positive shift in the market sentiment. If risk flows start to dominate the markets following Wall Street's opening bell, we could see USD/JPY extend its rally. Reflecting the upbeat market mood, the 10-year US Treasury bond yield is up nearly 5% on the day.

Technical levels to watch for